Big Drop in AmTrustDirect's Savings Account Rate
Oct 13, 2006 - 12:12 PM by Ken Tumin
AmTrustDirect just made a big change to their e-Money Market savings account. It changed from 5.30% APY for all balances to a tiered rate that starts at only 3.30% APY for the first $25K of balance. A balance of over $50K is required for an APY of 4.10%. The maximum rate is 5.50% APY but this requires a balance of $1 million.
For the last two weeks, it looked like AmTrustDirect and E-LOAN were going to be the two new major contenders for online savings accounts. This move takes AmTrustDirect out of the game and even behind ING Direct.
A few people have mentioned that online banks are moving to tiered rates. This happened a few months ago at VirtualBank and UmbrellaBank. The theory is that it's less costly for a bank to maintain an account for one person with a large balance than accounts for multiple people with small balances. We could also see this same tiered rates at E-LOAN. Hopefully, it won't be extreme as AmTrustDirect's new tier.
[Edit 10/13/06 12:00pm: The apparent rate drop was just an IT mistake. See post for more info.]
For the last two weeks, it looked like AmTrustDirect and E-LOAN were going to be the two new major contenders for online savings accounts. This move takes AmTrustDirect out of the game and even behind ING Direct.
A few people have mentioned that online banks are moving to tiered rates. This happened a few months ago at VirtualBank and UmbrellaBank. The theory is that it's less costly for a bank to maintain an account for one person with a large balance than accounts for multiple people with small balances. We could also see this same tiered rates at E-LOAN. Hopefully, it won't be extreme as AmTrustDirect's new tier.
[Edit 10/13/06 12:00pm: The apparent rate drop was just an IT mistake. See post for more info.]
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Anonymous - #1, Friday, October 13, 2006 - 9:44 AM
This is really a shame. A couple of weeks ago, I opened up a joint e-money market account with AmTrustDirect of $200,000.
On Monday, I will transfer it all (except for $0.1) to GMAC Bank which is paying 5.25%--1.15% more, which is significant.
It is too bad that AmTrustDirect has done this, but I guess they have the complete freedom to do so.
scott (anonymous) - #2, Friday, October 13, 2006 - 10:58 AM
Actually this might be a good thing. Becoming pretty clear that are days of rising rates are over for now, So I think I will just take my e-money and open a 6 Months 5.61% CD and end up making .31% more right now. Wonder how easy it is to open the CD and fund from savings? Has anyone done one?
Anonymous - #3, Friday, October 13, 2006 - 11:14 AM
If we pull all our money out of our account, will we lose any accrued interest for Oct. if a balance of only $.01 is left?
rate freak (anonymous) - #4, Friday, October 13, 2006 - 11:24 AM
Savings, money mkt accts and the likes can and have been changing at a moments notice, unlike CDs where the rates are locked in. It's nice to find an online bank w/a high APY. But some, if not many, have a condition where if you close acct before your next int. payout, you lose it all. So by the time one opens a new acct, the rate goes down, you close it, lose accrued int, and int lost due to transit time. Looks to be the norm in the meantime.
Anonymous - #5, Friday, October 13, 2006 - 11:30 AM
But some, if not many, have a condition where if you close acct before your next int. payout, you lose it all.
I have read AMTrust's disclosure, but I can't find any data that discusses how the interest payments are calculated and when they are paid.
scott (anonymous) - #6, Friday, October 13, 2006 - 11:34 AM
Another concern would be even if you keep it open by leaving a small amount you will then be in lowest tier when interest posts
Anonymous - #7, Friday, October 13, 2006 - 11:36 AM
Appears ATD switched it back to 5.30% across the board.
Anonymous - #8, Friday, October 13, 2006 - 11:39 AM
LOL,
There must have been a run on the bank!!! The rate is back to 5.30%.
WTF??? I am still pulling my money out...what a bunck of hacks!
Anonymous - #9, Friday, October 13, 2006 - 11:43 AM
I called AmTrust (12:30pm, October 13th) and was told that this information is in error. The rate is 5.30% APY for all e-Money Market accounts and they have no current plans to switch to a tiered rate scale.
It is my understanding that their site did show different figures for a period of time today. I've no idea why. Bottom line, it doesn't show that now.
Banking Guy (anonymous) - #10, Friday, October 13, 2006 - 12:15 PM
Yes, I've also been told by AmTrustDirect that this apparent rate drop was a just mistake on what was being displayed on the website.
Sounds like an unlucky Friday the 13th day for AmTrustDirect's webmaster....
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